🔥 Mortgage Assumption vs New Loan Calculator 2026
Should You Assume That 3% Rate? Complete Cost Comparison!
David Rodriguez
Refinance & Rate Specialist
12+ years mortgage assumption expert helping borrowers save thousands by assuming low-rate VA and FHA loans.
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⚡ Quick Answer (TL;DR)
Assume if: Rate is 2%+ lower than current rates AND you're staying 5+ years. You'll save $100K-$200K over 30 years.
Example: Assume $300K at 3% + $15K fees = $186,000 LESS than new $300K loan at 6.5% over 30 years.
Don't assume if: Rate difference is less than 1% OR you're selling in 2-3 years. Fees won't pay off.
What Is Mortgage Assumption? (The Basics)
Mortgage assumption means you take over the seller's existing mortgage instead of getting a new loan. You inherit their interest rate, remaining balance, and loan terms. This is HUGE when rates have increased significantly since the seller bought.
Example: Seller bought in 2021 with a VA loan at 3.0%. Today's rates are 6.5%. If you assume their 3% loan, you save 3.5% in interest for the entire loan term = $186,000 savings on a $300K loan over 30 years!
🔥 Real Reddit Story (January 2026)
"Found a house with an assumable VA loan at 2.875%. Seller owed $280K. I paid $420K purchase price. Assumed the $280K at 2.875% + brought $140K down payment. My payment is $1,162/mo. My friend bought similar house same week with NEW loan at 6.5% - his payment is $1,896/mo. I'm saving $734/mo ($264,240 over 30 years) just by assuming!"
- u/assumption_winner, r/RealEstate
This is EXACTLY why mortgage assumptions are exploding in 2026. Rates doubled, old loans are gold.
💰 Real Example: Assumption vs New Loan (30-Year Total Cost)
Let's compare the TOTAL 30-year cost of assuming a 3% loan vs getting a new 6.5% loan on a $300,000 mortgage:
| Factor | Assume 3% Loan | New 6.5% Loan | Difference |
|---|---|---|---|
| Loan Amount | $300,000 | $300,000 | — |
| Interest Rate | 3.0% | 6.5% | 3.5% LOWER |
| Monthly Payment | $1,265/mo | $1,896/mo | Save $631/mo |
| Total Payments (30 yrs) | $455,400 | $682,560 | Save $227,160 |
| Total Interest Paid | $155,400 | $382,560 | Save $227,160 |
| Upfront Costs | $15,000 (assumption fee) | $6,000 (closing costs) | +$9,000 MORE |
| NET 30-Year Savings | $218,160 (after paying $9K extra upfront) | ||
💡 Bottom Line
Even after paying $9,000 MORE in upfront fees, you save $218,160 over 30 years by assuming the 3% loan. That's a 2,424% return on the extra $9K you paid upfront!
📊 Break-Even Analysis: When Does Assumption Pay Off?
How Long to Break Even on $15K Assumption Fee?
✅ You break even in just 14 months. After that, you save $631/mo for the next 28.8 years = $218,160 total savings!
🎯 Rule of Thumb
Assume if: Rate difference is 2%+ AND you're staying 2+ years. You'll always profit.
Don't assume if: Rate difference is less than 1% OR you're selling in under 1 year. Fees won't pay off.
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🎯 When to Assume vs Get New Loan (Decision Framework)
✅ Assume the Loan If:
- ✓Rate is 2%+ lower than current rates (3% vs 6.5%)
- ✓You're staying 5+ years (maximize savings)
- ✓You have cash for large down payment (gap between price & loan balance)
- ✓You can afford $10K-$20K assumption fees
- ✓Loan has 20+ years remaining (more time to save)
- ✓You qualify for VA/FHA assumption (easier process)
💰 Typical Savings:
$100K-$250K over 30 years (depending on rate difference and loan size)
❌ Get New Loan If:
- ✗Rate difference is less than 1% (fees won't pay off)
- ✗You're selling in under 2 years (won't break even)
- ✗You DON'T have large down payment (gap too big)
- ✗Assumption fees are $25K+ (too expensive)
- ✗Loan has less than 10 years remaining (not enough time to save)
- ✗Seller's loan is conventional (harder to assume, higher fees)
💡 Better Option:
Get new loan with lower closing costs, negotiate seller to pay your costs, or wait for rates to drop
💰 Hidden Costs of Mortgage Assumption (What They Don't Tell You)
1. Large Down Payment Required
The Problem: You must pay the difference between purchase price and remaining loan balance.
Example:
- • Purchase price: $450,000
- • Seller's remaining loan balance: $280,000
- • YOU must bring: $170,000 down payment!
This is why assumptions work best for buyers with significant cash or who are selling another home.
2. Assumption Fees ($10K-$20K)
Typical Fees:
- • VA assumption fee: 0.5% of loan balance ($1,500 on $300K)
- • FHA assumption fee: $900 flat fee
- • Lender processing fee: $500-$1,500
- • Title/escrow fees: $2,000-$4,000
- • Credit report: $50-$100
- • Appraisal: $400-$600
- • Total: $10,000-$20,000
3. Longer Approval Timeline (45-90 days)
Assumptions take 2-3x longer than new loans because fewer lenders process them and underwriting is manual. Expect 45-90 days vs 30-45 days for new loan. Sellers may not want to wait.
4. Qualification Requirements
You must qualify for the assumption just like a new loan:
- • Credit score: 620+ (VA), 580+ (FHA)
- • DTI ratio: Under 43-50%
- • Income verification: 2 years tax returns, pay stubs
- • Lender approval required (not automatic)
❓ Frequently Asked Questions
Can anyone assume a mortgage?
No. Only VA, FHA, and USDA loans are assumable (with lender approval). Most conventional loans are NOT assumable. Check the seller's loan documents for an "assumption clause." If it says "due on sale," it's not assumable.
Do I need to be a veteran to assume a VA loan?
No! Non-veterans can assume VA loans. However, if you're NOT a veteran, the seller won't get their VA entitlement back until you pay off the loan or refinance. This may affect their ability to get another VA loan.
What if I can't afford the large down payment?
You have 3 options: (1) Get a second mortgage to cover the gap (80-10-10 loan), (2) Negotiate seller financing for part of the down payment, or (3) Get a new loan instead with lower down payment (3.5% FHA, 0% VA/USDA).
How do I find homes with assumable mortgages?
5 Ways to Find Assumable Loans:
- 1. Search MLS for "assumable" in listing descriptions
- 2. Use Roam.com or Assumable.com (assumable loan databases)
- 3. Ask your realtor to filter for VA/FHA loans (2019-2022 purchases)
- 4. Look for homes near military bases (high VA loan concentration)
- 5. Ask sellers directly if their loan is assumable
What happens to the seller after I assume their loan?
Once assumption is complete and lender approves, the seller is released from liability. You become 100% responsible for the loan. However, for VA loans, the seller's VA entitlement remains tied to the loan until you pay it off or refinance (unless you're also a veteran and substitute your entitlement).
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